Call v. Put

Call:
-Allows you to buy stock
-If you have one call that means you are able to buy that stock at your set price
-It has to reach the set price on or before your contract’s expiration
-If it doesn’t reach the set price, your contract deteriorates in value and you lose your option premium
-You buy it in hopes of stock going up
-As the stock price goes up, the call increases in value
-Similar to going long within stocks

Put:
-Allows you to sell stock (it gives you the right, but not the obligation)
-For example: you own 100 shares of Microsoft at $25 and you own a put of Microsoft at $20
-If the stock declines to $10/share and you have the put for that year, you can put somebody the stock at the $20 range
-You buy it in hopes of stock going down
-As the stock price goes down, the put increases in value
-You are hoping to sell the contract later at higher value
-Similar to short-selling

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49 COMMENTS

  1. but let's say you buy 1 put at 20 dollars a share and have 100 shares of msft… and the value goes to 50 dollars a shirt 6 months from now on, do i sell it at 20 dollars or 50 dollars? if you hope the stock to go down, how does the put option increase in value?

  2. but what if your broker doesn't support the presale hours between 4am and 7:30 am for pre market hours?

    how would your call and put work if those values happen during times your broker doesn't support?

  3. Hello. I have a question if you could help. I trade on questrade. I purchase 10 options for a stock at 1.50$ per 100. It was a 2019 january 1st expiration strike 16. I checked today and it says i have 10@ 0 average. And my p&l is is green 150$. What does that mean? I dodnt sell them yet. But under it says 0.15.???? Please help

  4. LFIN at $70. Buy a long term Deep OTM put LFIN strike $10 for pennies to the dollar extremely cheap (maybe $0.05?) It actually did drop all the way to $8 in 3 days. Now if you bought 500 PUT contracts for $2500 and the put becomes ITM… (option price $5) HAHA That would maybe be a 10000% gain. That's $2.5 Million in 3 days.

  5. I don't get the whole Options theory, its like grasping thin air. Your paying for an Option to buy/sell shares at a certain price, yet there's no intention to ever own them, just trading contracts that are based on speculation of future price movement.

  6. Why would anyone by the out option of the price is way below what they would buy it for? Like do you have to honor a put? I understand you have to right to sell if you want, but what if the buyer doesn’t want to buy?

  7. Sasha, what is the best option's book you ever read. I took your options courses and I consider myself intermediate options trader. I will be very happy to here from you. I have read three books at least about option.

  8. If I buy a put for one contract at a strike price of $10 and the stock is trading at $12 at the time and the put contract expires in three months and the stock tumbles to $5 in one month can I sell my put option before the put contract expires? Thank you.

  9. Why would someone buy your put. So, if I have 100 shares at 100$, with a put at 80$, and the stock drops to 60, why would I be able to sell my shares at 80 still? Why would anyone buy by 80$ share over the open price of 60$ per share

  10. Hi, great video! I'm now learning about options. I have a few dumb questions. Why and who would purchase stock above the market price? And who sells the stock below the market price? Are these transactions with the broker or the company? I'm unsure of the parties in these transactions. Thanks.

  11. A call is an option to buy a stock. As the stock price goes up the value of the call goes up ie the demand to own that call option or the option to buy stock increase. So in other words as stock becomes more expensive your right to buy this stock at a strike price determined by the call option cause the value of the option to increase.
    An option to sell or put option allows the seller the right but not the obligation to sell a stock at a predetermined price. If the stock price drops the put option increases because you can still sell this stock at a higher price.
    Option values are determined by 4 factors :1.volalitly in the market2.time to expiration 3 . stock price4.strike price5.interest rates

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